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Mercy Housing
September 16, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St., NW
Washington, DC 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
As a member of the National Community Reinvestment Coalition, Mercy
Housing, Inc. urges you to withdraw the proposed changes to the
Community Reinvestment Act (CRA) regulation. CRA has been instrumental
in increasing homeownership; boosting economic development, and
expanding small businesses in the nation's minority, immigrant, and low-
and moderate-income communities. Your proposed changes are contrary to
the CRA statute and Congress' intent because they will slow down, if not
halt, the progress made in community reinvestment.
The proposed changes will thwart the Administration's goals of
improving the economic status of immigrants and creating 5.5 million new
minority homeowners by the end of the decade by dramatically diminishing
banks' obligation to reinvest in their communities.
The proposed community development criterion will result in
significantly fewer loans and investments in affordable rental housing,
Low-Income Housing Tax Credits, community service facilities such as
health clinics, and economic development projects. It will be too easy
for a mid-size bank to demonstrate compliance with a community
development criterion by spreading around a few grants or sponsoring a
few homeownership fairs rather than engaging in a comprehensive effort
to provide investments and services.
The proposal would make 879 state-charted banks with over $392
billion in assets eligible for the streamlined and cursory exam. In
total, 95.7 percent or more than 5,000 of the state-charted banks your
agency regulates have less than $1 billion in assets. These 5,000 banks
have combined assets of more than $754 billion. The combined assets of
these banks rival that of the largest banks in the United States,
including Bank of America and JP Morgan Chase. The proposed changes will
drastically reduce, by hundreds of billions of dollars, the bank assets
available for community development lending, investing, and services.
The elimination of the service test will also have harmful
consequences for low- and moderate-income communities. Mid-size banks
will no longer make sustained efforts to provide affordable banking
services, and checking and savings accounts to consumers with modest
incomes. Mid-size banks will also not respond to the needs for the
growing demand for services needed by immigrants such as low cost
remittances overseas.
Another destructive element in the proposal is the elimination of the
small business lending data reporting requirements for mid-size banks.
Mid-size banks with assets between $250 million and $1 billion will no
longer be required to report small business lending by census tracts or
revenue size of the small business borrowers. Without data on lending to
small businesses, it is impossible for the public at large to hold the
mid-size banks accountable for responding to the credit needs of
minority-owned, women-owned, and other small businesses. Data disclosure
has been responsible for increasing access to credit precisely because
disclosure holds banks accountable. The proposal will decrease access to
credit for small businesses, which is directly contrary to CRA's goals.
In sum, the proposal is directly the opposite of CRA's statutory
mandate of imposing a continuing and affirmative obligation to meet
community needs. It will dramatically reduce community development
lending, investing, and services. Low- and moderate-income folks in
rural areas, who are least able to afford reductions in credit and
capital, will be seriously harmed. We urge you to withdraw this
proposal.
Sincerely,
Sister Lillian Murphy, RSM
President and CEO Mercy Housing, Inc.
cc: National Community Reinvestment Coalition (fax:
202-628-9800)
President George W. Bush (fax: 202-456-2461)
Senator John Kerry (fax: 202-224-8525)
Senator John Edwards (fax: 202-228-1374)
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